My condo is being foreclosed on in CA. was primary residence, then rental, now empty. Will I be liable for anything ? HOA curent, 1st mortgage

Asked by What To Do ?, Los Angeles, CA Thu Feb 3, 2011

Property taxes not paid, tried short sale, did not happen, buyers backed out three times, did not return signed paperwork, etc. This loan was refinanced, FHA loan, will I be 1099'ed? , tried to do a deed in lieu of, bank (Wells Fargo) would not put a deficiency clause in writing, said that how could I be liable if I no longer owned the home ?

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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Thu Feb 3, 2011
Regarding your liability in the case of a foreclosure, you would need to contact an attorney. A short sale may still be your best bet. You can call me directly to discuss how we might make this happen, even after a failed attempt with your prior agent.

Regarding receiving a 1099, whenever there is a cancellation of debt you will need to report it whether or not a 1099 is issued. Most banks are, however, issuing the 1099's. The problem, in a foreclosure, is the bank gets to set the market value of the property and therefore the taxable forgiveness amount. In a short sale, the market sets the value, based on how much you can sell the home for. And, there might be ways to keep you from having a tax liability on the cancellation of debt. I use a great accountant in Long Beach who would be able to run the numbers for you and tell you if you have a tax liability.

I would be availble to speak with you after 10:30 a.m. tomorrow morning. Please reach out and let's see if, working together, we can keep you from having a foreclosure on your record. Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
SSG Pro®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
424-2HELP12 (424-243-5712)
0 votes
Maria Cipoll…, Agent, Coral Springs, FL
Tue Oct 2, 2012
A short sale may be your best option and may allow you to sell your condo, before foreclosure. If you have an FHA's loan, you must have the FHA's approval before beginning a short sale that FHA will accept. Also, with an FHA approved short sale you may be elegible for up to $1,000 in relocation assistence. Find a real estate professional that have experienced in short sales in your area.

Best of Luck,

Maria Cipollone
2 votes
Ken Dorfman, Agent, Los Angeles, CA
Tue Oct 2, 2012
Why do I get the feeling that, either you tried to short sell the property yourself or, your agent was a little weak of the short sale process? A short sale can take a long time to put through, but, if done right, they do work. Property taxes get wrapped into the sale, or become the problem of the REO owner. HOA, the same. Both, unless something odd was baked in, are secured by the property, not you. The first shouldn't have any sort of deficiency judgment in California, except under a few circumstances, which aren't that complicated, but more than the limited space here allow.
Some of us get our kicks beating up on the banks. Talk to someone who wants to fight for you..

Ken Dorfman, Broker
Kenneth B Dorfman Real Estate
Los Angeles CA
Phone 888-846-0688
1 vote
Centermac Re…, Agent, Fremont, CA
Thu Feb 3, 2011
If you have only the 1st mortgage with no 2nd, the bank can't after you for any deficiency for several reasons, regardless of whether it is short sale, foreclosure, or deed in lieu. Here are the reasons why.

1. SB 931 which takes effect January 1, 2011 says in you do a short sale, lenders on the lst trust deed can't come after you for deficiency
2. If the bank decides to foreclose on you, the on-action rule and full credit rule most probably bars the lenders from coming after you.
3. If you do a deed in lieu, bank can't after you since their interest was not wiped out by a foreclosure. Bank has to exhaust the security before they come after you. If they take the deed in lieu, how can they claim that they have exhausted the security.
1 vote
Dp2, , Virginia
Fri Feb 4, 2011
Another option is to sell your property via creative financing. A second option is to equity partner with an investor on your property. A third option is to work with an investor who'd acquire the property via short paper.

Please send me more info about your property; I might be interested in it.
0 votes
Gene Scott, Agent, Long Beach, CA
Fri Feb 4, 2011
Dear Home Owner:
Yes you will be liable for a few things, but not your mortgage and not your property taxes.
1. SB 931, which became effective January 1, bars banks from receiving deficiency judgments on mortgages on property of 1-4 units.
2. When the bank forecloses on your property, it will pay the taxes current. In fact, it probably already has paid the taxes current, check with the County Tax Collector.
3. Your HOA can come after you if your HOA dues are not paid current. Some associations are more lax in enforcing their rights than others. However, I always tell my clients to pay their HOA dues, even if they are not paying their mortgage and property taxes.

Just because your short sale was not approved previously, does not mean that it is not worth pursuing a short sale right up until the date of your trustee sale. Here is why. If your property goes to foreclosure, you are going to have a problem obtaining financing to buy any more property for a period of four years from the date of the foreclosure. If your property is sold in a short sale, then you will be able to obtain financing in two years. So a short sale is definitely worth pursuing, right up to the last minute. We have had good success with Wells in the past, so I do not think that Wells was the entire problem. When you go into a short sale, the buyers are a huge part of the equation. Your agent needs to communicate accurately to the buyers' agent any problems and the necessary steps to negotiate an approval with the lender.

I have an article on people who walked on their mortgages. Pretty interesting. I am happy to send it to you if you contact me by email.

Best of luck,

Gene Scott
ERA Buy America Real Estate Services
0 votes
Eli Givoni-S…, , Boca Raton, FL
Fri Feb 4, 2011
I would suggest you try to do a short sale again. There's no reason it shouldn't go through. This will protect your credit and address your potential debts.

We are a professional short sale service and would be happy to explain the process to you. Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
0 votes
Natalie Reed, , Long Beach, CA
Thu Feb 3, 2011
As for your taxes not paid you will want to seek the advise of a tax attorney and also you may have recourse since you refinanced and a attorney can best answer your questions. However, I am a licensed real estate agent and can assist you with your forclosure, but I need to know if you received your Notice of Default and or Trust Sale Date. Why did the buyers back out and who is your loan servicer? I am available to meet tomorrow, Friday, 2/4/11 at 11:00 am or 2 pm to discuss. Which time is best for you?

I look forward to meeting with you.

Natalie Reed
Doma Properties
401 Pine Ave.
Long Beach, Ca 90802
310-920-8988 direct
0 votes
Cricket And…, Agent, Sherman Oaks, CA
Thu Feb 3, 2011
It is my understanding that if you have refi'ed, then the lender can come after you for the deficiency. Sounds like things were pretty chaotic on the short sale end of it-- were you working with an experienced agent? I would contact a real estate attorney about what the deed in lieu protects you from. It might be built into the instrument itself.
0 votes
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